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The Schmidt's hit by the fan: Alphabet investor sues Google bigwigs over EU antitrust ruckus

Anonymous Coward
Anonymous Coward

That's silly

Even if the company has to pay the mentioned $7B, the total additional income they get from aggressively pushing their products over the ten years of legal procedures is probably going to be higher still.

User McUser

Re: That's silly

They made something like USD$4.2Billion in profit after taxes just this quarter (Q12016). So yeah, $7B isn't going to be a problem for them.

Mage
Silver badge

Re: That's silly

profit after taxes?

Wait... they pay real taxes?

It's an interesting suit.

The 3 Billion though might be the tip of an iceberg. The drive by WiFi slurp, Free DNS ip & request logging, reading of gmail, single log in for all disparate services, YouTube copyright theft, google fonts, analytics, search manipulation, tax avoidance, Uber investment, android slurp via Google blob needed for Google Play, Google maps etc

Their privacy abuse and financial "cleverness" is the most advanced in history?

bazza
Silver badge

Re: That's silly

No it's not silly. It's $7billion, which is way too much to lose no matter how many other billions in profit there are. Losses are considered on an absolute scale, not a relative scale. And to shareholders, who are generally pension schemes one way or other (including yours), $7billion is a lot.

And this might be just the beginning. As well as the antitrust investigation in the commission, the French police have raided their Paris office and there is a live investigation into tax evasion and money laundering going on. If that sticks then it's criminal offences and correspondingly higher fines.

So that 7 billion has the potential to grow a lot. And that's before every other country in Europe with a Google office rushes to prosecute too to get their fines paid before somewhere else fines Google into oblivion first. In Europe the findings of the French legal system sets a precedent across the whole of Europe, not just France.

Google argue that they do what they do to fulfil their prime directive, to maximise shareholder value. But there's no point doing that to excess in the short term at the expense of long term shareholder value. Google's board look like they will be asked to explain exactly how honestly they considered the question "is this a good idea". If they find themselves in court answering that question then they personally will need to have an answer better than "everyone else does it".

Speaking of everyone else, it'll be interesting to see what Apple, Amazon, Starbucks, etc. all do if Google are successfully prosecuted by the French. They've got similar (though more discrete, non-customer facing) arrangements which might suddenly start looking like a huge liability...

bazza
Silver badge

Re: That's silly

Hmm, presumably down voters don't mind paying extra on their taxes because too many companies are successfully not paying tax anywhere. And presumably they don't mind paying extra for the goods and services they buy simply because Google are a monopoly big enough to skew the advertising market.

Google take about £150 each year out of the pockets of every wage earner in the UK through their take of the advertising market. Ad funded doesn't come cheap.

ratfox
Silver badge

Re: That's silly

I think the downvoters find that you are mixing stuff that are unrelated. This suit is specifically about antitrust. Google is not going to use the "everybody else does it" defense, because they're the only ones in position to do it — that's the whole point.

You're also somehow accusing Google of money laundering, and I have no clue where you got that from.

I also want to call out the claim that Google is taking £150 a year out of the pockets of "every wage earner" in the UK, first because that's how much Google made in the country over ten years, but also because it's ridiculous to assume that without Google, this money would somehow have made its way into the pockets of people instead of another advertising company.

As to the shareholder lawsuit, Google came very close to striking a deal with the EU, brokered by Eric Schmidt with the previous commissioner, which was scuppered at the last minute by political pressure. I think it was reasonable for Google to think that they would get away with what they are doing, since they almost did. From that point, I don't think that the shareholder lawsuit is justified, since Google really did take the decisions that seemed best at the time. It's blaming them because their foresight was not as good as your hindsight.

Then again, lawsuits don't have to make sense in the US.

bazza
Silver badge

Re: That's silly

This suit is certainly related to the anti trust investigation in the European Commission.

However it might well become the first of several such suits should the French criminal investigation stick and result in hefty fines. That's why the 7 billion may grow. Criminal fines could be substantially larger, and Google shareholders correspondingly more likely to launch additional suits to this one. As Uber found out the French aren't very tolerant of big companies play fast and loose with too-sharp business practices.

Of course nothing substantive has happened at all as yet, but for a company like Google to be the focus of so much legal investigation doesn't exactly instill confidence in their strategy.

bazza
Silver badge

Re: That's silly

Re advertising market: UK online advertising is £7 billion per year, Google getting a big 50% slice of that. Approx 30 million wage earners, it's about £120 per wage earner per year. It comes out of their pockets because the things wage earners buy are advertised, which is paid for from the price paid in the shops.

Fundamental rule of advertising: the consumer pays for it one way or other, even if they never saw the ad. Ad funded is not the same as free.

Ledswinger
Silver badge

Re: That's silly

Ad funded is not the same as free.

That's true. But since businesses have finite and usually pre-set advertising budgets, the marginal cost of advertising to you and I is very close to zero. And therefore, if you get something from Google, you're not paying anything extra for it in cash. In terms of privacy, yes you're "paying extra", but there's no additional financial cost added to the products you buy, since the budgets would have been set and frittered anyhow, were Google not present.

Anonymous Coward
Anonymous Coward

Re: That's silly

"Google take about £150 each year out of the pockets of every wage earner in the UK through their take of the advertising market. Ad funded doesn't come cheap."

How do you figure they take that money "out of your pocket"? Coca-Cola not getting to buy as many clicks comes "out of your pocket"? I think the truth is that if the corporate marketers were not paying as much for Google, they would just find some other way to waste the cash. Maybe there would be a nice billboard out your front window that doesn't exist. MSFT, on the other hand, is taking cash out of your pocket directly. If MSFT would just adhere to the common formats for docs, 90% of people and companies would just stop buying Office and use Libre or whatever instead.

Ad funded doesn't come cheap... for corporate marketing departments. For everyone else, it is free. Robin Hood situation. I think it is great that Google has figured out a way for credit card companies to voluntarily pay for my software.

Anonymous Coward
Anonymous Coward

Re: That's silly

Exactly. Marketing budgets are usually set as a % of revenues at a company. If Google were to charge less, that doesn't mean that company is going to lower the price of their products. It means that we would see more billboards or get more junk mail or marketers would just buy 2,000 clicks from Google instead of 1,600 clicks from Google. That money will be spent. It will be spent on something marketing related.

Anonymous Coward
Anonymous Coward

I can't help wondering just how close this shareholder is to Microsoft. This is just too convenient like SCO v IBM.

Anonymous Coward
Anonymous Coward

This is nothing like SCO(MS?) vs IBM.

Anonymous Coward
Anonymous Coward

Agree. I kind of assume at this point (given the vast evidence), that anything of this sort is just some sort of Microsoft scheme. Microsoft has been throwing mud at Google, not even so subtly, for years. They have dumped untold amounts into the cause of smearing Google. Most of it is just laughable, given the source. "Google is stealing your data!" from the company, MSFT, who built backdoors for every government agency to Windows for years (or maybe Windows was the back door). MSFT has done a pretty good job of smearing in that most people don't recognize that all these "internet privacy" watchdogs work for Redmond. It is also crazy that these anti-trust regulators are taking advice from MSFT... given their deep concern with competitive markets. I am wholeheartedly in favor of Google, just because the alternative is to fall back into the MSFT dark ages. Google can have all my info for their ad purposes. It beats "Binging it" on a Zune phone.

tom dial
Silver badge

@Ivan4:

My first question after seeing the headline on this article was "who is this plaintiff's lawyer billing."

Another alternative is that he is a lawyer, and hopes to promote this to class action status, and with that win a few pennies for each shareholder (including himself) and collect a truckload of money for himself as the lead attorney for the class.

That said, this suit might be a tad premature inasmuch as the alleged losses are, as yet, entirely hypothetical.

Anonymous Coward
Anonymous Coward

That said, this suit might be a tad premature inasmuch as the alleged losses are, as yet, entirely hypothetical.

Except that they're spending money on it right now, and the current share price will to some extent reflect the potential for these future loses. Google has operations world wide, and if they end up getting taken to court all over then as plaintiff you'd want your claim at the head of the queue. And with so many things going on (EU antitrust, Paris raid, etc) it seems likely that something will stick, and stick in a big way.

Google, and indeed the wider tech industry, have been allowed to create immense walled gardens. Get inside one of these and you cannot interoperate with someone in another walled garden. They have stamped all over the principles of interoperability that underpin fair and open competition. The only reason they have got away with it is that politicians and prosecutors have yet to work out that this is what has happened, and that the consequences are real. As soon as they do, and we're beginning to see this happening in Europe, there'll be hell to pay.

My first question after seeing the headline on this article was "who is this plaintiff's lawyer billing."

It's irrelevant. Google's board have a fiduciary duty of care towards their shareholders no matter who they are. Neglect that duty in a bad enough way and you can, at least in America, end up in jail. Shareholders suing their board has happened before. So long as the plaintiff has a share, they're entitled to hold their board to account.

Anonymous Coward
Anonymous Coward

"Shareholders suing their board has happened before."

Some shareholder suing the Board is what is known as "Tuesday" at large corporations. Usually they just take a handful of change and throw it on the ground for the shareholder's lawyer to pick up. The lawyers are always agitating some fund or shareholder to sue over anything negative. Easy money.

DCFusor
Silver badge

Never have money when powerful governments are broke.

Title says most of it. They're desperate out there, toss things at the wall till something sticks. They control the glue. Nuff said.

Anonymous Coward
Anonymous Coward

Re: Never have money when powerful governments are broke.

Especially if you've got the money through what later turns out to be dodgy business practices on an enormous scale, because then you were never entitled to that money in the first place. Reporting it as profit makes it worse, because there's shareholders who will be extremely disappointed when they learn that the books didn't reflect reality after all.

Given the amount of money Google, Apple, Amazon, Starbucks, etc, don't pay in tax anywhere it's not surprising that governments are beginning to take an interest. If governments worldwide decide that these companies are no longer socially useful but are instead bleeding their economies dry to a damaging extent, they will act. The US government used to be quite good at this - IBM, Bell, Xerox?, Standard Oil, etc.

Anonymous Coward
Anonymous Coward

Re: Never have money when powerful governments are broke.

I don't think Google is doing anything dodgy. Google controls, and this is actually amazing given how large Google is, 3% of the total global advertising spend. You can advertise without Google, if you so choose. They have a premier property which advertisers really want to advertise on, and pay a premium price to do so.... If that is ripping people off, then Wimbledon is ripping people off because they are charging a premium to advertise at their tournament vs other less prestigious tennis tournaments.

The critical point is choice. Do people have to advertise on Google? No, there are a million other ways to advertise.... This is not Windows in the 90s where people just had to shut up and pay Microsoft whatever Microsoft said to pay because there were no other viable options.

Anonymous Coward
Anonymous Coward

Re: Never have money when powerful governments are broke.

I don't think Google should be included in that group. Google has brought a ton of social utility to people. I paid zero dollars for my phone and tablet and Chromebook's OSs because of Google. If I had bought all that stuff under the previous regime, MSFT, I would have had to pay $200-300 (for worse products).

Google's value to people, ultimately, is that they are going to make all the software people use on a day to day basis free. Who loses on this deal? Google wins, average people win, advertisers win, corporations (not named Microsoft) will eventually win when they get much low to no priced, high quality software.

Doctor Syntax
Silver badge

Did he vote against appointment of the board? Did he, as a big shareholder, raise issues with the board? Were the European business practices of the company hidden from him? If not it would appear that he's gone along with things so what's his complaint now?

Ledswinger
Silver badge

so what's his complaint now?

He should sue himself. I daresay that's readily possible under the dysfunctional US legal system. And as he strutted back and forth in the courtroom, pontificating for both plaintiff and defendant, presumably he'd be thinking about stringing the case out to inflate his fees on both accounts.

Anonymous Coward
Anonymous Coward

MSFT

The thing that bothers me about all these suits and investigations is MSFT. MSFT openly does the things they are accusing Google (and Apple before them) of doing all the time. What was that Edge nonsense (basically need to root you Windows 10 machine to get rid of Edge) that just happened? Could there potentially be an anti-competitive situation in productivity software when MSFT charges $400 for the full version of Office when their competitors (few as they are) charge $0... and MSFT is still the market leader? MSFT violates their anti-trust agreements so routinely that the EU and certainly the DOJ in the US has just decided to give up.... It seems like Google just needs to grease a few wheels in Brussels, make a few contributions... and all this goes away as it did for MSFT. I'm done taking these regulators seriously. It is just a shakedown.

Anonymous Coward
Anonymous Coward

You would think El Reg would be firmly on Google's side in this EU dispute. El Reg uses Google DoubleClick banner ads. If Google prices get cut, El Reg's revenues are also cut... unless they can increase readers. Not much chance of that though. The number of people interested in arguing about the validity of SPC-1 benchmarks at 2:00am is finite.

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